Welcome to Corporate Benefits Division




Accidental Death and Dismemberment

AD&D provides coverage for death or dismemberment resulting directly from accidental causes. Provides benefits in the event of loss of life, limbs or eyesight as the result of an accident.

Accidental Death Benefit

A provision added to an insurance policy for payment of an additional benefit in case of death by accidental means. It is often referred to as double indemnity.

Actively at work

Carrying out regular duties at the employer's place of business or some other location required by the employer's business. An employee is also considered actively at work when absent only due to a scheduled day off or vacation but otherwise able to perform regular duties.


An acupuncturist inserts very fine needles, sometimes in conjunction with electrical stimulus, into the body's surface. This is done to influence the body's physiological functioning.

Adjusted Premium

If there has been a renewal rate adjustment, during the experience period under review, the premium is adjusted to the level it would have been had the current rates been in effect during the entire period. This allows for an accurate assessment of the current rates for the purpose of determining the required renewal rates.

Administrative Services Only (ASO)

ASO is an arrangement whereby an insurance company, or other organization, is contracted for the sole purpose of adjudicating claims. The administrator settles claims but does not guarantee payment because the plan is uninsured. There are no reserves established by the administrator under ASO arrangements and the entire financial risk is borne by the employer.

Administrator (Employee Benefit Plans)

The person designated as such by the instrument under which the plan is operated. If the administrator is not so designated, administrator means the plan sponsor. If the administrator is not designated and the plan sponsor cannot be identified, the administrator may be such person as is prescribed by regulation of the secretary of labor. The administrator's responsibilities are as follows: 1. Act solely in the interest of plan participants and beneficiaries, and for the exclusive purpose of providing benefits and defraying reasonable administrative expenses. 2. Manage the plan's assets to minimize the risk of large losses. 3. Act in accordance with the documents governing the plan. The individual or company responsible for administering a group insurance contract including such services as accounting, issuance of certificates and settlement of claims.

Adverse Selection

See Anti-selection.


A change in the terms of an existing plan or the initiation of a new plan. A plan amendment may increase benefits, including those attributed to years of service already rendered. (Insurance) A formal document changing the provisions of an insurance policy signed jointly by the insurance company officer and the policyholder or his or her authorized representative. See also Retroactive Benefits.

Anniversary Date

See Renewal Date.


The tendency of people with poorer than average health expectations to apply for, or continue, insurance coverage to a greater extent than do people with average or better health expectations. Also referred to as Adverse Selection.


An agreement under which one party (the assignor) transfers their rights to another party (the assignee). This is most often used under dental plans where the employee assigns the benefit payment to the dentist. The dentist submits the employee's claim electronically to the insurance carrier and the carrier sends the payment back directly to the dentist.


(Formerly CompCorp) www.assuris.ca
A federally incorporated, non-profit company established by the CLHIA to protect Canadian consumers against loss of benefits in the event a life or health insurance company becomes insolvent. All life insurance companies licensed in Canada are required to become members of Assuris and to remain members as long as they have any business in Canada.


A healthcare professional specializing in identifying, diagnosing, treating and monitoring disorders of the auditory and vestibular system portions of the ear. Audiologists are trained to diagnose, manage and/or treat Hearing (Sense) or balance problems They dispense hearing aids and recommend and map cochlear implants.


Any systematic investigation of procedures or operations for the purpose of determining conformity with prescribed criteria.



A person named by the participant in an insurance policy or pension plan to receive any benefits provided by the plan if the participant dies. A person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.

Beneficiary, Contingent

An alternate beneficiary. One whose rights under a contract are dependent upon the death of the original beneficiary or some other contingency.


The rights of the participant or beneficiary to either cash or services after meeting the eligibility requirements of the pension or other benefit plans. Pension benefits usually refer to monthly payments payable on retirement or disability.

Benefit Package

A listing of specific benefits provided by an employee benefit plan. The total value of noncash compensation.

Benefit Period

The number of days for which benefits are paid to the named insured and his or her dependents. For example, the number of days that benefits are calculated for a calendar year consist of the days beginning on January 1 and ending on December 31 of each year.

Benefit Year

The 12-month period commencing on the effective date of the group policy and each subsequent 12-month period.

Benefits Specialist

An individual in an organization, typically in the human resource management function, whose responsibility it is to administer the employee benefits program.

Best Practices

Superior performance by an organization in both management and operational processes.

Book Rates

See Manual Rates.

Brand-Name Drug

A drug protected by a patent issued to the original innovator or marketer. The patent prohibits the manufacture of the drug by other companies as long as the patent remains in effect. See also Generic Equivalent Drugs.

Break-even Loss Ratio

See Target Loss Ratio.

Bridge Benefit (Canada)

A supplemental pension benefit payable from the date of early retirement until the age of entitlement for government pensions.


An insurance solicitor, licensed by the Province, who places business with a variety of insurance companies and who represents the buyers of insurance rather than the companies even though he or she is paid commissions by the companies. An agent who handles the public’s orders to buy and sell securities, commodities or other property. For this service, a commission is charged that, depending upon the firm dealt with and the amount of the transaction, may or may not be negotiated.


Calendar Year Deductible

A deductible that applies to any eligible medical expenses incurred by the insured during any one calendar year.

Canada Health Act

The Canada Health Act is federal legislation that puts in place conditions by which individual provinces and territories in Canada may receive funding for health care services.

Canadian Council of Insurance Regulators (CCIR)

The collective body formed by the provincial Superintendents of Insurance. They meet regularly to share information, discuss common concerns, and recommend uniform insurance legislation to the provincial legislatures.

Canadian Institute for Health Information (CIHI)

The CIHI was specifically created by the federal/provincial/territorial governments to be a central repository for administrative health data. CIHI is a good source for statistical information about the Canadian health system and the delivery of health care.

Canadian Insurance Services Regulatory Organization (CISRO)

The CISRO is an organization of licensing and regulatory authorities for insurance intermediaries across Canada. Its mandate is to facilitate and promote an effective regulatory system in Canada to serve the public interest and enhance consumer protection.

Canadian Life and Health Insurance Association (CLHIA)

CLHIA was established in 1894. It’s a voluntary, non-profit industry association of life and health insurance companies operating in Canada. The association’s overall mission is to serve its members in areas of common interest, need and concerns. The CLHIA publishes guidelines concerning various aspects of insurance matters known as CLHIA Guidelines. It also represents the industry at various levels of the government.

Canadian Life and Health Insurance Compensation Corporation (CompCorp)

On December 1, 2005 the name was changed from CompCorp to Assuris. See Assuris.


A commercial insurer, a government agency or a Blue Cross or Blue Shield plan that underwrites or administers programs that pay for health, life or other insurance services.

Carryover Deductible

The deductible payable under continuation coverage includes the portion of the deductible satisfied before the qualifying event.

Carryover Provisions

(Compensation) An employer policy that lets employees take unused vacation time in a subsequent calendar or fiscal year. (Health Care) Provision in major medical plans to avoid two deductibles applied to covered medical expenses when expenses are incurred toward the end of one calendar year, and sickness or injury continues into next year.

Certificate of Insurance

This is a document the insurer must provide to each employee covered under a group insurance plan. It includes the plan description and outlines the principal benefits and conditions under the master group insurance contract.

Certified Employee Benefit Specialist®

A designation granted jointly by the International Foundation of Employee Benefit Plans and the Wharton School of the University of Pennsylvania to individuals who complete eight college-level courses and examinations in the areas of compensation and design and operation of employee benefit plans and who pledge to a code of ethical standards and continuing education. In Canada, the program is presented jointly by the International Foundation of Employee Benefit Plans and Dalhousie University of Halifax.


Chiropodist is more commonly known as a foot doctor. Chiropodist is the British English version of podiatrist, which is the American English version of “foot doctor.”


Chiropractors, also known as doctors of chiropractic or chiropractic physicians, diagnose and treat patients with health problems of the musculoskeletal system and treat the effects of those problems on the nervous system and on general health.


An itemized statement of services rendered by a health care provider for a given patient. The claim is submitted to a health benefits plan for payment. A request for payment under an employee benefit plan (pension or health and welfare) or insurer by a plan participant or beneficiary for the payment of certain benefits. The right to any debts, privileges or other things in possession of another; also, the titles to anything which another should concede to, or confer on the claimant.

Claim Administrator

Any entity that reviews and determines whether to pay claims to enrollees or physicians on behalf of the health benefit plan. Claim administrators may be insurance companies or their designated claims review organizations, self-insured employers, management firms, third-party administrators or other private contractors.

Claim Form

The form used to file for benefits under a health plan.

Claims - Incurred Claims

The sum of paid claims plus the change in the Incurred But Not Reported (IBNR) claims reserve.

Claims - Paid Claims

The amount of actual cheques issued during a specific period of time.

Claims Experience

The frequency, cost and types of claims insured employees file to receive benefits. One of the primary factors used in calculating insurance premiums.

Claims Fluctuation Reserve (CFR)

This is a reserve established by the insurer when a group is underwritten on a retention accounting basis. The reserve is funded through emerging surplus until the ultimate level is reached. The ultimate level is dependent upon the size of the group and plan design and usually ranges between 10% and 20% of the annual premium. The purpose of the reserve is to absorb any potential significant increase in paid claims over a period of time. If a deficit is generated in any given year the loss is first recovered through the CFR. Any remaining deficit would be carried-forward and recovered through future year’s surplus. Also referred to as a Rate Stabilization Fund.

Claims Procedure

Each plan is required to provide a claims procedure, which must be explained to plan participants and beneficiaries. The denial of a claim made under the claims procedure must be in writing, with an explanation of the reasons for the denial.

Claims Services Only

A contract designed for fully self-insured employers that need very little administrative assistance. Under a CSO arrangement, the insurer administers only the claims portion of the plan.

CLHIA Guidelines

The CLHIA Guidelines replace the former Guidelines of the Superintendents of Insurance. They maintain the spirit of consumer protection and fair practices inherent in the former Superintendents’ Guidelines. It is a series of guidelines developed by the CLHIA regarding various insurance matters and it provides a minimum standard for group insurance practices. All insurers are expected to abide by these guidelines as a condition of their membership to the association. These guidelines apply to life insurance, accidental death and dismemberment insurance, disability insurance, accident and sickness insurance, health and dental insurance. They do not apply to annuities, blanket insurance, creditor group insurance, family insurance and personal accident and sickness insurance issued to the client base of a credit card issuer.


A policy provision, frequently found in major medical insurance, by which the insured person and the insurer share the hospital and medical expenses resulting from an illness or injury in a specified ratio (e.g., 80%: 20%), after the deductible is met. A form of cost sharing.


See Co-insurance.

Common Law

That body of law deriving from judicial decisions, as opposed to legislatively enacted statutes and administrative regulations.


A person who gives professional or expert advice.

Consumer Price Index (CPI)

CPI is the measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. Changes in the CPI are used to assess price changes associated with the cost of living.

Contingency Charge

A charge set up under each policy to offset any insurance company contingencies or catastrophic losses. Also referred to as a Risk Charge or Contingency Reserve.


A promissory agreement between two or more persons that creates, modifies or destroys a legal relation. In general, it must have the following elements: creates an obligation, competent parties, subject matter, legal consideration, mutuality of agreement, mutuality of obligation, must not be so vague or uncertain that terms are not ascertainable, and generally is in writing signed by both parties.


The transfer of funds or property by either an employer or an employee to an employee benefit plan.

Contribution Basis

The specific percentage of the premium paid by the employee and employer under group insurance plans. Also referred to as Cost-sharing.

Contributory Plan

A group insurance plan in which the employee pays a portion of the premium cost.

Conversion Privilege

In Canada, all group life insurance policies are required to include a conversion privilege. This provision allows an insured, whose coverage terminates for certain reasons, to convert the group insurance coverage to an individual policy without providing evidence of insurability.

Coordination of Benefits

A group health insurance policy provision designed to eliminate duplicate payments and provide the sequence in which coverage will apply (primary and secondary) when a person is insured under two contracts.

Corporate Owned Life Insurance

A policy covering an executive who is essential to an organization. The organization is the beneficiary; if the executive dies while covered, the organization pays an equivalent noninsured amount to designated survivors. Policy loans on the insurance are available to the organization; the interest is partially deductible.

Cost Containment (Medical)

Methods and programs designed to contain costs by ensuring appropriateness, medical necessity and relatedness of treatment and procedures. Examples include utilization review and bill review.

Cost-of-Living Adjustment (COLA)

The provision usually applies to Long Term Disability (LTD) benefits whereby the monthly benefit is increased annually (January 1st) by the lesser of CPI or the maximum percentage increase indicated in the contract.


A special arrangement whereby the policyholder pays to the insurer enough funds to reimburse an employee for certain medical or dental costs plus a margin to cover the insurer’s administrative costs. The cost-plus arrangement is usually used for expenses which are either not covered under the insured plan or are in excess of the amount allowable under the insured plan.


See Contribution Basis.


Describes the number or percentage of employees eligible for participation under an employee benefit plan. Benefits available to eligible individuals under an employee benefit program. With reference to revenue and corporate bonds, it indicates margin of safety for payment of debt service, reflecting the number of times by which earnings for a period of time exceed debt service payable in such period.

Covered Employee

A person covered by a pension or welfare plan is one who has fulfilled the eligibility requirements in the plan; for whom benefits have accrued, or are accruing; or who is receiving benefits under the plan.

Covered Expenses

Hospital, medical and related costs incurred by those covered under the insurance policy that qualify for reimbursement according to the terms of the contract. Most commonly used in regard to major medical plans.


The size of the group and/or the length of time it has been insured with the carrier will determine the degree of weighting which is given to the group’s own claims experience. This is referred to as the degree of credibility. The theory stems from the fact that the more people insured, and the longer they are insured the more predictable, or credible, their claims experience becomes. The higher the degree of credibility, the greater reliance the carrier places on the group’s own claims experience to establish rates. The lower the degree of credibility, the more reliance the carrier will have on their manual rates. The degree of credibility is usually expressed as a percentage.

Critical Illness Insurance

Insurance protection designed to provide a lump-sum payment equal to the full value of the policy or a percentage of the policy depending upon the product design, to the insured/policy owner upon the diagnosis of a covered critical illness. Typical illnesses covered include heart attack, stroke, cancer, paralysis, renal failure and Alzheimer's disease. Many policies offer a partial payment for certain medical procedures such as coronary bypass surgery or angioplasty. Some policies offer a return of all premiums in the event of death of the insured, others pay the full benefit upon the insured's death.

Customary Charge

The amount that a physician or other medical provider usually charges the majority of patients for each service. Generally the maximum amount a health insurance plan or Medicare will allow for covered expenses.



A flat amount of covered expenses that an insured must pay out-of-pocket before benefits become payable by the insurer. Most plans have a calendar year deductible but benefit year deductibles are not uncommon.

Deductible - Pro-rated deductible

The procedure utilized by insurers to allow for the appropriate deductible amount to be utilized in claims settlements based on the date of change of a health/dental plan from one carrier to another. For example, if a company has health coverage with insurer “A” with an anniversary date of January 1 and a deductible of $100 and then places their health coverage with insurer “B” as of July 1 – the deductible utilized by insurer “B” on a pro-rated basis would be $50.

Deductible Carryover

A feature whereby covered charges in the last three months of the year may be carried over to be counted toward the next year’s deductible.

Dental Care Benefits

Dental insurance plans usually cover preventive care and treatment of teeth, gums and the mouth. Some plans may also cover orthodontia, X-rays and cosmetic work. Dental care benefits are considered a part of health care benefits, but insurance plans generally separate the two.


A dependant is your spouse or child. Any person who is in the armed forces full-time is not eligible as a dependant.


An expert in "Food" and "Nutrition" Dietitians help promote good health through proper eating. They also supervise the preparation and "Foodservice" service of food, develop modified "Diet (nutrition)" diets, participate in "Research", and educate individuals and groups on good nutritional habits. Artificial nutritional provision to patients not able for normal oral intake and dietary modification to address medical issues involving dietary intake is a major part of dietetics. The goals of the dietary department are to provide medical nutritional intervention, obtain, prepare, and serve flavorsome, attractive, and nutritious food to patients, family members, and health care providers.

Direct Claims - Payment

A payment method whereby reimbursement of the claim is deposited directly into the employee's bank account. The explanation of the benefit payment (EOB) is mailed to the employee's home address.

Direct Claims - Submission

A method whereby the employee submits claims directly to the insurer rather than submitting claims through the policyholder. Insurers also have arrangements with pharmacies, hospitals, dentists and other providers whereby claims may be submitted directly from them to the insurer.

Direct Claims:

A condition that renders an insured person incapable of performing one or more duties of his or her regular occupation. Benefit plan definitions of disability vary. The Social Security Act defines disability as follows: (Total disability is the) inability to engage in any substantial, gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of not less than 12 months (and which precludes the claimant from performing not only his previous work, but considering his age, education and work experience any other kind of substantial gainful work which exists in the national economy regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for the work).

Disability Benefit

Periodic payments, usually monthly, payable to participants under some retirement plans if such participants are eligible for the benefits and become totally and permanently disabled prior to the normal retirement date. Includes short-term and long-term disability benefits.

Disability Income Insurance

A form of health insurance that provides periodic payments to replace a certain percentage of income lost when the insured is unable to work as a result of illness, injury or disease.

Disability Management

The proactive employer-centered process of coordinating the activities of labor, management, insurance carriers, health care providers and vocational rehabilitation professionals in order to minimize the impact of injury, disability or disease on a worker’s capacity to successfully perform his or her job.

Disabled Life Reserve (DLR)

An actuarial reserve, established by the insurer, for totally disabled employees who qualify for benefit payments under the terms of a Long Term Disability contract. The insurer bases the level or amount of this reserve on estimates of the present value of all expected future payments. This reserve is necessary because once a claimant qualifies for benefits the insurer must continue to provide benefits even if the policy subsequently cancels. Also referred to as an Open Claims Reserve.


The requirement of plan administrators to distribute or make available to plan participants and/or other beneficiaries materials such as summary plan descriptions and annual reports.


The loss, or loss of use, of a limb or loss of sight from an injury.

Double Indemnity

A provision under which certain benefits are doubled when accident is due to specified circumstances, such as public conveyance accidents; in a life insurance policy, a provision that the face amount payable on death will be doubled if the death is the result of an accident.


Effective Date

The date on which an insurance policy or retirement plan goes into effect and coverage begins. Also, the date pay increases go into effect.

Electronic Data Interchange (EDI)

This is the electronic transfer of claim documents between computers. Pharmacists, dentists and other providers can submit claims electronically, on behalf of their patients, to a central computer source which automatically re-routes the claim to the appropriate insurance carrier. The entire process is automated and no paper processing is involved.

Electronic Funds Transfer (EFT)

The electronic transfer of funds may be used for direct with-drawl of monthly premiums from the employer’s bank account or direct deposit of claim reimbursement into the employee’s bank account. It should be noted that if EFT is used for claims payment the reimbursement will be deposited into the employee’s bank account, and not the claimant’s (if a dependent), because the employee is the certificate holder.

Eligibility Date

The date an individual and/or dependents become eligible for benefits under an employee benefit plan.

Eligibility Period

A period of time, usually 31 days, when potential members of a group life or health insurance plan can enroll without evidence of insurability.

Eligibility Requirements

Conditions that an employee must satisfy to participate in a plan or obtain a benefit.

Elimination Period

Usually in reference to disability coverage, it refers to the length of time between the date of disability and the date benefit payments commence. Also referred to as the qualifying period.

Emergency Medical Services

Treatment of patients suffering from accidents or sudden and serious illness.


An individual who is compensated for services performed and whose duties are under the control of an employer.

Employee Assistance Program

An employment-based health service program designed to assist in the identification and resolution of a broad range of employee personal concerns that may affect job performance. These programs deal with situations such as substance abuse, marital problems, family troubles, stress and domestic violence, as well as health education and disease prevention. The assistance may be provided within the organization or by referral to outside resources.

Employee Benefit Plan

A plan established or maintained by an employer or employee organization, or both. The purpose is to provide employees with a certain benefit such as pension, profit-sharing, stock bonus, thrift, medical, sickness, accident or disability benefits.

Employee Benefits

A collection of nonwage compensation elements, including but not limited to, income protection, services and income supplements for employees, provided in whole or in part by employer payments.

Employee Contributions

Made by an employee into a plan. May or may not be required for participation. See also Contributory Plan; Voluntary Contribution.

Employee-Pay-All Plan

One in which employees pay all costs for the plan; the employer does not make any contributions.


Any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan. The term also includes a group or association of employers acting for an employer in such capacity.

Enrolled Group

Persons with the same employer, or with membership in an organization in common, who are enrolled in a health plan. Usually, there are stipulations regarding the minimum size of the group and the minimum percentage of the group that must enroll before the coverage is available.


Any process by which an individual and/or dependents become subscribers to health plan coverage, flexible benefit plans, etc. May be done either through an actual “signing up” of the individual, by virtue of a collective bargaining agreement or by conditions of employment.

Errors and Omissions (E&O) Insurance

Insurance that protects an agent, or advisor, against financial liability resulting from his or her negligent acts or mistakes.

Evidence of Insurability

Any statement or proof of a person’s physical condition and/or other factual information affecting his/her acceptability for insurance. Generally submitted for excess Basic Life or Optional Life insurance, excess Long Term Disability insurance, or late enrolment in a plan of insurance.

Expected Claims

The claims forecast for a group or covered person. The expected claims level becomes the breakeven point with respect to expected premium for a period of coverage.


Usually expressed as a ratio or percentage, it is the relationship of premium to claims, coverage or benefits of a plan for a specified period of time.

Experience Adjustment

This represents the premium rate adjustment which is required based purely on the group’s own claims experience. It is calculated by dividing the loss ratio, or if applicable, a weighted loss ratio by the target loss ratio.

Experience Credibility

(See Credibility)
Experience credibility refers to that portion of the group’s own claims experience which will be used in the establishment of the premium rates. It is expressed as a percentage.

Experience Rating

The process of determining the premium rate for a group risk, wholly or partially on the basis of that group’s experience.

Experience Study

An actuarial analysis of the plan’s experience in membership age, sex, salary and service giving effect to the assumed rates of mortality, disability, employment turnover, investment earnings and other cost factors.

Experience-rated - Fully Experience-rated

A method of determining premium rates by giving full credibility to the group’s own claims experience.

Experience-rated - Partially Experience-rated

A method of determining premium rates by giving partial credibility to the group’s own claims experience and partial credibility to the insurer’s manual rates.

Expiration Date

The last day on which a stock option may be exercised. The date the insurance master contract expires or the date an individual or employee ceases to be eligible for coverage.

Explanation of Benefits

A statement from the insurer sent to a group member who files a claim giving specific details about how and why benefit payments were or were not made. It summarizes the charges submitted and processed, the amount allowed, the amount paid, and the subscriber balance, if any.

Extended Benefits

Comprehensive benefits provided in excess of basic health care plans. Extension of benefits for limited periods after termination of plan coverage. Extension of unemployment compensation benefits during periods of high unemployment.

Extended Health Care (EHC)

EHC is a benefit which provides hospital and medical coverage over and above the services provided under the government health plan. Also referred to as a Major Medical Benefit.


Fee Guide

A fee structure published annually by each provincial dental association (with the exception of Alberta*) which suggests dollar limits for various dental procedures. Insurers use this fee guide to establish what they’ll pay for dental services claimed. The annual increase in the Ontario Dental Association (ODA) Fee Guide over the last three years has been between 2% and 4%. Also referred to as a Fee Schedule.

* Effective January 1, 1998 the Alberta Dental Association (ADA) announced to its members that it would no longer produce a suggested fee guide. Instead of a structured fee guide the ADA would survey its members and produce a document outlining a range of fees charged within the province for each procedure. Dentists would be able to set their own fees based on their individual business situations. From January 1, 1998 to December 31, 2000 the insurance industry based their reimbursement on the 1997 ADA fee guide. On January 1, 2001 they agreed to assume a common inflationary increase. Today most insurers have their own method of establishing the fees they’ll allow for Alberta claims.

Fee Schedule

A listing of fees or allowances for specified medical procedures, which usually represents the maximum amounts the program will pay for specified procedures.

Fellow, Life Management Institute (FLMI)

This is an educational program, sponsored by LOMA, which is designed to help students achieve a working knowledge of the life and health insurance business. There are two levels to the program. A certificate is granted upon completion of level 1 and a diploma and designation upon completion of level 2.

Financial Services Commission of Ontario (FSCO)

The Financial Services Commission of Ontario (FSCO) was created on July 1, 1998, as an arm’s length agency of the Ministry of Finance. FSCO integrates the operations of the former Ontario Insurance Commission (formerly the Office of the Superintendent of Insurance), Pension Commission of Ontario, and Deposit Institutions Division of the Ministry of Finance. This is the agency responsible for administering Ontario’s insurance laws and regulations.

Full-Time Employees

Employees of an employer who work for 1,000 or more hours in a 12-month period or employees who usually work 40 hours per week.

Fully Insured Plan

A group insurance plan in which an insurer pays all claims and assumes all risks for an employer in exchange for payment of a regular premium. Separate contracts are issued on the life of every employee.


General Death Benefit

A benefit payable under a group term life insurance plan on the death of an employee, without special conditions.

Generic Equivalent Drugs

Prescription drugs that are equal in therapeutic power to the brand-name originals because they contain identical active ingredients at the same doses.

Goods and Services Tax

This is a federal tax charged on the sale of most goods and performed services in Canada. In group insurance it is charged on the Administration Fee for non-insured plans.

Grace Period

The grace period for group insurance is usually 31 days from the premium due date, and coverage remains in-force during the grace period. If the policyholder doesn’t pay the premium by the end of the grace period the coverage terminates.

Graduated Benefits

Health care or other employee benefits plans in which the amount contributed by the employer is determined by the number of years the worker has been employed by the company, so shorter-term workers pay more for their coverage than those who have been with the company for many years.

Grandfather Clause (Grandfathering)

An exception to a restriction that allows all those already doing something to continue doing it even if they would be stopped by the new restriction.

Group Contract

A contract of insurance made with an employer or other entity that covers a group of persons identified by reference to their relationship to the entity buying the contract: e.g., members of a trade association, employees of a common employer, members of a labor union; or members of some other group or association not formed for the purpose of buying insurance.

Group Insurance

This type of insurance issued on a group of people under a master contract. It is usually issued to an employer for the benefit of his/her employees. The insured employees are given certificates as evidence of their insurance.

Group Universal Life Plan

A form of group life insurance that combines term protection for designated beneficiaries with an investment element for the policyholder, which can be used to create nontaxable permanent insurance or to accumulate tax-deferred capital. Participation is entirely voluntary and all premiums are paid by the employee.

Guaranteed Issue Limit

See Non-Evidence Maximum.


Health Care Cost Trend Rate

An assumption about the annual rate of change in the cost of health care benefits currently provided by the postretirement benefit plan, due to factors other than changes in the composition of the plan population by age and dependency status, for each year from the measurement date until the end of the period in which benefits are expected to be paid. Considers estimated health care inflation, changes in utilization and delivery patterns, advances in technology and changes in health status of plan participants. Different health care services may have different trend rates.

Health Care Flexible Spending Account

Allows employees to set aside pretax funds for eligible health care benefits such as physical exams, vision care and dental care, including deductibles and copayments. See also Flexible Spending Accounts (FSAs).

Health Care Provider

An individual or institution that provides medical services (e.g., a physician, hospital, laboratory, etc.). This term should not be confused with an insurance company which “provides” insurance.

Health Insurance

Protection that provides payment of benefits for covered sickness or injury. Included under this heading are various types of insurance, such as accident insurance, disability income insurance, medical expense insurance, and accidental death and dismemberment insurance.

Hold-Harmless Agreement

An arrangement by means of a formal agreement whereby the policyholder agrees to be responsible for any emerging deficit upon contract termination, usually in exchange for the insurer’s agreement to charge lower premiums than it believes are required.

A hold-harmless agreement may also be used for the Incurred But Not Reported (IBNR) claims reserve. Under this arrangement the policyholder is responsible for the payment of any claims incurred prior to the contract termination date but reported after the contract termination date.


An alternative medical system that treats the symptoms of a disease with minute doses of a drug that produce the same symptoms in a healthy person as are present in the disease. This is thought to stimulate physiological defenses against the symptoms of the disease. Homeopathy as a formal system of medicine is no longer practiced in the United States. However, it may be informally practiced as an alternative therapy.


Health care facility or program providing medical care and support services, such as counseling, to terminally ill persons and their families.


A legally constituted institution having organized facilities for the care and treatment of sick and injured persons on a resident or inpatient basis, including facilities for diagnosis and surgery under the supervision of a staff of one or more licensed physicians and which provides 24-hour nursing services by a registered nurse on duty or call. It does not mean convalescent, nursing, rest or extended care facilities or a facility operated exclusively for the treatment of the aged, drug addict or alcoholic, whether or not such facilities are operated as a separate institution by a hospital.

Hospital Benefit Plan

A plan that makes cash payments or reimburses employees for hospital charges up to a certain amount or assumes the costs for certain specified hospital charges such as room and board, services, drugs and supplies.

Hospital Indemnity Policy

A form of health insurance that provides a stipulated daily, weekly or monthly indemnity during hospital confinement. The indemnity is payable on an unallocated basis without regard to the actual expense of hospital confinement.


Income Averaging

A method of determining how much tax is owed on a lump-sum distribution from a qualified pension plan. An individual who receives such a distribution and includes it in taxable income may be eligible to treat the tax liability as if the distribution had been received over a five- or ten-year period. Certain requirements must be met.

Incurred but Not Reported

Claims that have been incurred but have not been reported to the insurer as of some specific date. Often a disputed figure since carriers must estimate this liability for accounting purposes based on their experience with claims lags.

Incurred Claims

Incurred claims equal the claims paid during the policy year plus the claim reserves as of the end of the policy year, minus the corresponding reserves as of the beginning of the policy year. The difference between the year-end and beginning of the year claim reserves is called the increase in reserves and may be added directly to the paid claims to produce the incurred claims.


Literally, “to save harmless.” Thus, one person or organization agrees to protect another against loss.


A benefit paid by an insurer for a loss insured under a policy.

Inflation Factor

The regular but varying annual increase in health costs based on increases in the cost of medical services. It is usually closely tied with the general economic inflation forecasts. Sometimes referred to as a trend factor.


A means of providing or purchasing protection against some of the economic consequences of loss. Risk of loss is transferred to a third party in exchange for a “consideration” or premium. This exchange creates an insurance contract.

Insurance Contract

An irrevocable contract in which the insurance company unconditionally undertakes a legal obligation to provide benefits in return for a premium, thereby transferring risk from the employer (or the plan) to the insurance company.

Insurance Tax

This is a provincial tax applicable to every insurance company. It is more commonly referred to as Premium Tax.


An organization, insurance company or other, that assumes the risk and provides the policy to the insured.


Job Description

A summary of a job’s purpose, listing its tasks, duties, responsibilities, and the skills, knowledge and abilities needed to perform the job competently. A job description describes and focuses on the job itself, not on any specific individual who might fill the job.


Key Employee

A criterion used to describe highly compensated officers or owners of companies and to establish whether a defined benefit pension plan is top-heavy; if it is, special requirements for vesting, contributions and benefits must be met to retain tax qualification. Before 2002, a key employee was a participant who, at any time during the plan year: (1) earned at least 50% of the dollar limitation for defined benefit plans (adjusted annually) and was an officer; (2) earned more than the dollar limitation for defined contribution plans (adjusted annually) and was one of the ten employees owning the largest interest in the employer; (3) owned more than 5% of the employer; or (4) earned more than $150,000 and owned less than 1% of the employer. After 2001, a key employee is a participant who at any time during the preceding year is described in (3) and (4) above or who is an officer and earns more than $130,000 (as indexed).

Key Employee Insurance

Protection of a business firm against the financial loss caused by death or disability of a vital member of the firm; a means of protecting the business from the adverse results of the loss of an individual possessing special skills or experience.


Large Amount Pooling

An approach whereby individual health claims in excess of a pre-determined level are not charged to the group’s claims experience but rather to the pool of the insurer. The insurer charges a pooling charge for this protection.

Level Commission Scale

A commission scale which applies the same % commission rate to the premium each year, regardless of the policy year.

Level Down-Scaled Commission Scale

A commission scale which provides a varying rate of commission based on the size of the annual premium. This is the most common type of commission scale used under group plans. There is often a separate scale for Life & Health and LTD. The AD&D premium may be included with the Life & Health premium or it may have a separate flat commission rate. A typical level down-scale is as follows:

Life and Health Premium
LTD Premium
On the 1st $10,000 10.0% On the 1st $15,000 15.0%
On the next $15,000 7.5% On the next $10,000 10.0%
On the next $25,000 5.0% On the next $25,000 5.0%
On the next $50,000 3.0% On the next $50,000 plus 1.0%
On the next $150,000 2.0%

On the next $250,000 plus 1.0%


The process by which an agency of government--usually state government--grants permission to an individual or organization to engage in a given occupation or business upon finding that the applicant has attained the competency necessary to ensure that the public health, safety and welfare will be reasonably well protected.

Life Insurance

A type of insurance that provides a sum of money if the person who is insured dies while the policy is in effect.

Long-Term Care

Includes all forms of services, both institutional and noninstitutional, that are required by all people with chronic health conditions, the elderly or those with physical disabilities who need help with activities of daily living. Long-term care is palliative only--relieving symptoms, but not effecting a cure.

Long-Term Care Benefit

An accelerated death benefit provided by some individual life insurance policies under which the insurer agrees to pay a monthly benefit to an insured who requires constant care for a medical condition.

Long-Term Care Insurance

A type of health insurance available through private insurers that covers long-term care nursing home care and long-term custodial care at home. Designed to prevent depletion of the policyholder’s assets.

Long-Term Disability

A disability that prevents a person from continuing in the occupation for which he or she was trained, lasting two years or more.

Long-Term Disability Income Insurance

Insurance issued to an employer (group) or individual to provide a reasonable replacement of a portion of an employee’s earned income lost through serious and prolonged illness or injury during the normal work career.

Loss of Benefits

An employee’s right to accrued benefits from personal contributions is not subject to forfeiture under any circumstances. However, a plan may provide for the forfeiture of vested benefits derived from employer contributions in the event of the employee’s death before retirement. This forfeiture rule does not apply if the employee continued to work after retirement eligibility and if a joint or survivor annuity was to be provided. A limited forfeiture may take place if a retiree returns to work for his or her employer (or returns to work in the same industry, in the case of a multiemployer plan).

Loss Ratio

The ratio of paid and incurred claims plus expenses to premium.

Loss Reserve

As stated on a financial statement, an amount representing the estimated liability for unpaid insurance claims (losses) that have occurred as of a given date. Includes losses incurred but not yet reported (IBNR), claims being adjusted and amounts known to be payable in the future (e.g., long-term disability). On an individual basis, loss reserve represents an estimate of the total amount ultimately to be paid out on that claim.


Magnetic Resonance Imaging

A noninvasive diagnostic procedure of imaging soft tissues using a powerful magnet and radio waves to produce computer-processed images of the inner body.

Major Medical Insurance

Supplementary insurance coverage (beyond basic medical) intended to cover the costs associated with a major illness or injury. Although characterized by large maximum limits, some limitations apply. The term can also refer to the catch-all portion of a medical plan that picks up payment for miscellaneous charges.

Mandatory Employee Contribution

A contribution that is made by employees in order to participate in the plan, share in employer contributions or in some way receive more favorable treatment than those not contributing.

Manual Rate

Premium rate for group insurance coverage from the company’s standard rate tables; based on the experience of an average group, not any particular group. It is used to determine the premium for a small group.


The practice of soft tissue manipulation with physical, functional, and in some cases psychological purposes and goals.

Master Contract

A life insurance policy that insures a number of people under a single insurance contract; a contract between an insurance company and a group policyholder in which the individuals insured are not parties to the contract.

Medical Insurance

Protection that provides benefits for the cost of any or all of the numerous health care services normally covered under various health care plans.

Medical Loss Ratio

An index which compares the costs of delivering health benefits with the revenues received by the plan.

Minimum Continuing Capital and Surplus Requirement (MCCSR)

These are regulatory rules that contain detailed instructions for determining the amount of capital that a life insurance company is required to maintain. In general, companies are expected to maintain a MCCSR ratio of available capital over required capital of at least 120%.

Minimum Group

The least number of employees permitted by law to effect a group for insurance purposes; the purpose is to minimize risk and maintain some sort of proper division between individual policy insurance and the group forms.

Minimum Participation Rules

Numbers of employees to participate in most retirement plans. Usually at least 50 employees or 40% of the total number of employees enrolled.

Miscellaneous Hospital Expenses

A provision for the payment on a blanket basis or schedule basis of hospital services (other than room and board, special nursing care and doctor fees) up to a stipulated maximum amount. Also called ancillary charges.


The incidence and severity of sickness and accidents in a well-defined class of people.


The incidence of death in a well defined class of people.

Multiple Employer Group

A group of two or more employers that are not financially related.


Naturopathic medicine

A "Complementaty and Alternative Medicine" complementary and alternative medicine which emphasizes the body's intrinsic ability to heal and maintain itself. Naturopaths use natural remedies such as herbs and foods rather than "Surgery"or synthetic "Medication" drugs.

Non Discrimination Rules

The requirements that self-funded employee benefit plans not provide significantly greater benefits to higher paid employees and owners than to lower paid employees. Although some disparity is permitted, there are limits which, if crossed, result in the benefits being deemed taxable income to the beneficiaries.

Non Evidence Maximum

is the amount of insurance offered to a plan member without any requirement that the member provide information about his or her state of health. If a member requests a coverage limit in excess of the non-evidence maximum, the member must complete the Proof of Insurability.

Non Exempt Employees

Employees who are subject to the minimum wage and overtime pay provisions of the Fair Labor Standards Act. Most are paid on an hourly basis.

Non Occupational Death Benefit

A benefit payable upon the death of an employee, resulting from any cause other than that occasioned by the performance of an act or acts of duty.

Non-contributory plan

A group insurance plan in which the employer pays the total premium cost.

Non-Medical Maximum

See Non-Evidence Maximum.

Nurse Practitioner

A registered nurse who has completed a nurse practitioner program at the master’s or certificate level and is trained in providing primary care services. Generally, nurse practitioners provide services at a lower cost than primary care physicians.

Nursing Home

A licensed institution that provides skilled nursing care and related services but does not qualify as a skilled nursing facility as defined by Medicare. Nursing homes are usually operated for profit. Medicare and private Medigap insurance plans reimburse only a small portion of the costs; Medicaid covers the entire cost for qualified individuals.


Occupational Death Benefit

A benefit payable upon death of an employee resulting from his performance of an act or acts relating to the duties of his position in the employer’s service.

Occupational Disability Benefit

A benefit payable on account of disability arising out of and in the course of employment.

Occupational Therapist

A health professional who is trained in the practice of occupational therapy.

Office of the Superintendent of Financial Institutions Canada (OSFI)

The federal agency responsible for regulating and supervising banks, insurance, trust, loan and investment companies, federally-regulated pension plans, and co-operative credit associations that are licensed or regulated by the federal government. The federal Minister of Finance oversees OSFI.

Office of the Superintendent of Insurance

This is a provincial agency established to administer the province’s insurance laws and regulations. While most provinces call this agency the Office of the Superintendent of Insurance, Ontario replaced this agency with the Ontario Insurance Commission in 1990 and then with the Financial Services Commission of Ontario (FSCO) in 1998. The director of the Office of the Superintendent of Insurance is known as the Superintendent of Insurance.

Ontario Insurance Commission

See Financial Services Commission of Ontario.

Open Claims Reserve (OCR)

See Disabled Life Reserve.

Open Enrollment

Usually refers to the granting, by the insurer, of group insurance benefits to a specified group of employees as of a certain date or between two specified dates. The offer usually entails waiving the normal evidence of insurability requirements.


A practitioner of "Osteopathy", a system developed by Andrew Still in the United States of America and practiced throughout the world. osteopathic medicine is a complete system of healthcare with a philosophy that combines the needs of the patient with the current practice of medicine. Doctors of osteopathic medicine (DOs) practice a whole-person approach, which means they consider both the physical and mental needs of their patients.


Self-employed individual who owns the entire interest in an unincorporated business, or a partner who owns more than 10% of the capital or profit interest of the partnership. If the owner-employee established a plan just for his or her employees but does not cover himself or herself, the rules for qualification and tax treatment of contributions and benefits are the same as those plans established by corporate employers.


Paid Claims

The dollar value of all claims paid (e.g., hospital, medical, surgical) during the plan year, regardless of the date that the services were rendered. Measures a plan’s performance.

Paid Premium

Agreed upon fees paid for coverage of medical benefits for a defined benefit period. Premiums can be paid by employers, unions, employees, or shared by both the insured individual and the plan sponsor.

Part-Time Employees

Refers to employees who work less than 1,000 hours for an employer in a year. Such employees may be kept from participating in qualified retirement plans.

Partial Disability

An illness or injury that prevents an insured person from performing one or more of the functions of his or her regular job.


The number of employees insured under the group plan in relation to the total number of employees eligible for coverage. It is usually expressed as a percentage. All insurers have minimum participation requirements on contributory plans, which usually vary by the size of the group.

Participation Requirements

Most pension and other employee benefit plans provide that a new employee must wait a specified length of time before he or she is eligible to participate in the plan


Concerned with the diagnosis and treatment of gum disease known as periodontitis. Periodontists are also concerned with the implementation and maintenance of dental implants to replace missing teeth.

Permanent Disability

Employee’s inability to work at any job, rather than at the specific job held at the time the disability was incurred. Permanent disability is typically covered by insurance for those employees who become disabled before reaching the age of 65.

Physical Therapy

Treatment of disease and injury by physical means, including exercise, manipulation, electricity, heat, cold and water.


Physiotherapists treat patients with physical difficulties resulting from illness, injury, disability or ageing. They treat people of all ages including children, the elderly, stroke patients and people with sports injuries. Physiotherapists work with patients to identify and improve their movement and function. They help promote their patients' health and wellbeing, and assist the rehabilitation process by developing and restoring body systems, in particular the neuromuscular, musculoskeletal, cardiovascular and respiratory systems. They devise and review treatment programmes, comprising manual therapy, movement, therapeutically exercise and the application of technological equipment, e.g. ultrasound. Physiotherapists also provide advice on how to avoid injury.


An arrangement under which employer and employee contributions, if any, are deposited with a trustee who is responsible for the administration and investment of these monies and the income earned on accumulated assets of the fund, and who is normally responsible for the direct payment of benefits to eligible participants under the plan. Benefits are often paid by an insurance company with transfers from the trust fund as required. The trustee may be a corporate trustee (trust company) or an individual.

Plan Participant

Any employee or former employee of an employer, member or former member of an employee organization, sole proprietor, or partner in a partnership who is or may become eligible to receive a benefit of any type from an employee benefit plan, or whose beneficiaries may be eligible to receive any such benefit. See also Active Participant; Participation Requirements.

Plan Sponsor

The party that establishes and maintains the plan, which is (1) the employer, in the case of an employee benefit plan maintained by a single employer; (2) the employee organization, in the case of a plan maintained by an employee organization; or (3) the association, committee, joint board of trustees or other similar group of representatives of the parties involved, in the case of a plan maintained by one or more employers and one or more employee organizations.

Plan Suspension

An event in which the pension plan is frozen and no further benefits accrue. Future service may continue to be the basis for vesting of nonvested benefits existing at the date of suspension. The plan may still hold assets, pay benefits already accrued and receive additional employer contributions for any unfunded benefits. Employees may or may not continue working for the employer.

Plan Termination

When the plan ceases to exist and benefits are settled. Replacement with another plan is not a termination. ERISA requires that all accrued benefits (to the extent funded) must be fully vested upon the termination or partial termination of a plan. (A partial termination might result from a large reduction of the workforce or a sizable reduction of benefits under the plan.) (Canada) Voluntary or involuntary discontinuance of a plan.


A field of medicine devoted to the study and treatment of disorders of the foot and ankle. It is practiced by podiatrists.

Pool Adjustment

Pool adjustment refers to the portion of the Health and/or Dental renewal rate which represents the carrier’s pooled, or manual, rate. This is the non-credible portion of the premium rate.

Pool Credibility

Pool credibility refers to the amount of the pool adjustment that will be used in the determination of the Health and/or renewal rates. It is expressed as a percentage and calculated as the Experience Credibility.

Pooled Rates

See Manual Rate


This is a funding method whereby the premiums and claims, for a particular benefit, are combined or pooled with those of many other groups.

Pre-Existing Condition

A physical and/or mental condition of an insured person that existed prior to the issuance of his or her policy. Some plans may cover these conditions after a waiting period of six months to a year, while others may permanently exclude a person with a preexisting condition from coverage.

Premium Rate

The rate charged per unit (i.e. per $1,000 of coverage, per employee, etc.) for a particular benefit. With respect to health and dental coverage the premium rate may be divided into the following:

Single rate The rate charged for single coverage
Couple rate The rate charged for 2 persons (usually husband and wife)
Family rate The rate charged for family coverage. Also called the married rate.
Dependent rate The portion of the family rate applicable to coverage on the lives of the employee’s family. It is calculated by subtracting the single rate from the family rate.
Premium Tax

See Insurance Tax.

Prescription Drug Formulary

A listing of prescription medications that will be covered by a plan or insurance contract that often fosters substitution of generic or therapeutic equivalents on a cost-effective basis.

Prescription Drug Plan

Usually a provision under medical coverage plans whereby the beneficiary can obtain prescription drugs without incurring potentially large out-of-pocket expense. Different types of prescription drug plans are available. Examples are discount plan, closed panel drug plan, service-delivered plan, mail-order plan and maintenance drug option with major medical plan.

Preventive Care

Comprehensive care emphasizing priorities for prevention, early detection and early treatment of conditions, generally including routine physical examinations, immunization and well-person care. See also Wellness (Health Promotion) Programs.

Primary Payer

The insurance carrier that has first responsibility under coordination of benefits.

Probationary Period

See Eligibility Period and Waiting Period.

Proof of Insurability

Also known as Evidence of Insurability; additional information required about a person’s health, job and lifestyle to decide if the requested coverage will be provided.


A written submission to a prospective group insurance policyholder usually made through an advisor. This submission outlines the benefits and costs under the plan being proposed and the basis on which the insurer is willing to provide it. Also referred to as a quote, quotation or prospectus.


Qualification Period

The period of time between the beginning of a disability and the start of a policy's benefits.

Qualified Disability Benefit

A disability benefit provided by a plan that does not exceed the benefit that would be provided if the participant separated from service at normal retirement age

Quality of Care

Refers to the degree of success by which a medical provider increases the probability of desired patient outcomes and reduces the likelihood of undesired patient outcomes, given the state of medical knowledge. Quality of care is dependent on the training, credentialing and experience of medical providers. Measurements for quality of care can include preventive services, death rates, surgery rates, inpatient stays, outpatient utilization, use of drug therapies and survival rates for catastrophic illness.


Rate Change Date

See Renewal Date.

Rate History

The chronological history of all premium rate revisions, and date of these revisions, on a particular benefit or group of benefits.

Rate Stabilization Reserve (RSR)

See Claims Fluctuation Reserve.


The process that determines how much a particular package of benefits will cost and what will be charged (premium) to cover those expected costs for a specific group of people.

Reasonable and Customary (R&C) Charge

The prevailing charge made by physicians of similar expertise for a similar procedure in a particular geographic area. See also Usual, Customary and Reasonable (UCR) Fees.


Services and facilities patients use as part of recovering from an accident or illness. Restoration of a totally disabled person to a meaningful occupation. A provision in some long-term disability policies that provides for continuation of benefits or other financial assistance while a totally disabled insured is retraining or attempting to resume productive employment.


The acceptance by one or more insurers, called reinsurers, of a portion of the risk underwritten by another insurer.

Renewal Date

The annual date on which a group insurance plan is reviewed and the premium rates recalculated for the upcoming policy year. Also referred to as the anniversary date or rate change date.


The process of making the transition from an overseas assignment to the home country.


A sum set aside by an insurance company or self-funded plan to assure the fulfillment of commitments for future claims.

Retail Sales Tax

This is a provincial tax applicable in Ontario & Quebec and is charged on all insurance plans regardless of whether they are insured or self-insured.


The amount retained by the insurance company for its expenses, commission, premium tax, risk charge and profit charge.

Retention Accounting

The actual display of a group’s annual financial results detailing the premiums paid, claims paid, the insurer’s retention charges and the resulting surplus or deficit.

Retention Agreement

The document which outlines the terms and conditions under the retention accounting arrangement.

Risk Charge

See Contingency Charge.

Risk Pool

The population of individuals (or groups) across which costs for insured expenses are spread through premiums or other mechanisms.

Risk Sharing

A method by which premiums and costs of medical protection are shared by plan sponsors and participants.


Secondary Payer

The insurance carrier that is second in responsibility under coordination of benefits.

Segregated Fund

An annuity offered by an insurance company which guarantees a specific percentage return on the investment upon maturity. It is similar to a mutual fund, and is offered by a insurance company. The term "segregated" is used because the funds are kept separate from the issuing company's other investment funds. Segregated funds also contain other beneficial provisions, including the exemption from certain fees, such as the probate fee that would normally be charged when funds are passed to a beneficiary.

Self-Administered Plan

(Directly Invested or Trusteed) A plan funded through a fiduciary, generally a bank, but sometimes a group of individuals, that directly invests the funds accumulated. Retirement payments are made from the fund as they fall due. This term is used to designate a plan that is not funded through an insurance company. (Health Care) A plan administered by the employer or welfare fund without recourse to an intermediate insurance carrier. Some benefits may be insured or subcontracted while others are self-funded.

Self-Insurance (Self-Funding)

A fully noninsured or self-insured plan is one in which no insurance company or service plan collects premiums and assumes risk. In a sense, the employer is acting as an insurance company--paying claims with the money ordinarily earmarked for premiums. Regardless of the specific self-funding technique a firm chooses, it will need to either buy its administrative services (ASO) outside the company or develop them in-house. Hence, self-funded arrangements are referenced as ASO or self-administered.

Service Provider

Any of the following who provide service to a benefit plan: persons, such as accountants, attorneys, enrolled actuaries, investment managers, trustees or other plan fiduciaries; entities, such as third-party administrators or insurance carriers.

Short-Term Disability

Often considered to be a disability lasting usually not longer than two years.

Short-Term Disability Income Insurance (STD)

An income replacement benefit, which is usually payable weekly, after an elimination period, to a disabled employee. It typically replaces a percentage of the employee’s earnings. Generally, a Short Term Disability plan refers to a self-insured employer sponsored plan. Whereas, a Weekly Indemnity plan refers to an insured plan.

Sick Leave

Plans that provide employees protection against short-term disability and typically specify a maximum number of benefit days per year or per disability that an employee may take at full pay before insured short-term or long-term disability benefits are initiated.

Single Employer Plan

A pension plan maintained by one employer. Also, the term may be used to describe a plan maintained by related parties such as a parent and its subsidiaries.

Skilled Nursing Care

Around-the-clock nursing and rehabilitative care that can only be provided by, or under the supervision of, skilled medical personnel.

Skilled Nursing Facility

A care setting for patients who have chronic diseases or no longer require hospital care, but need 24-hour nursing care and other defined health care services.

Speech-language pathology

The study of disorders that affect a person's speech, language, cognition, voice, swallowing "(Dysphagia") and the "Physical medicine and rehabilitation" rehabilitative or corrective treatment of physical and/or "Cognition" cognitive deficits "Speech Disorder" disorders resulting in difficulty with communication communication and/or swallowing..

Stop Loss

Under this arrangement the insurer accepts the financial risk for claims in excess of a pre-determined amount whereby stopping the policyholder’s losses. Stop-loss protection is available on either an individual or aggregate basis. When the stop-loss protection is on an individual basis it is more commonly referred to as Large Amount Pooling.

Stop-Loss Provision

A health insurance policy provision. A stop-loss provision is determined in two ways: either after a certain amount of benefits are paid from the plan or after a certain amount of out-of-pocket expenses are paid by the individual or family unit. When the dollar amount specified is reached, the coinsurance factor is raised to 100%. When there is a stop-loss provision in the plan (besides the separate maximums and coinsurance levels on outpatient mental and nervous disorders), outpatient mental and nervous charges usually do not apply toward the dollar figure used to calculate when the stop-loss begins; after the stop-loss does begin, it does not apply to these charges.


The right of the employer or insurance company to recoup benefits paid to participants through legal suit, if the action causing the disability and subsequent medical expenses was the fault of another individual. Used as a cost-containment measure. Generally, the substitution of one person or entity for another in regard to a legal right, interest or obligation.


Some contributory plans that do not permit employees to withdraw from the plan while continuing in employment do permit them, on application, to suspend contributions temporarily. The term also refers to a temporary interruption of employer contributions that may sometimes be permitted by an insurance company and/or the secretary of the treasury without terminating the plan.


Target Case

A highly regarded case (because of the nature of its business, financial reasons, prestigious account, growth potential, etc.) which is sought after or targeted as a desirable case. Usually special underwriting and pricing considerations are necessary to be awarded these cases.

Target Loss Ratio (TLR)

This is the ratio at which the insurance company has covered both incurred claims and their cost of administering the plan. It is calculated by subtracting the carrier’s total cost, as a percentage, from 100%. (i.e. If the carrier’s total expenses equals 17% of the premium the target loss ratio would be 83% of premium.) As groups grow in size the expenses, as a percentage of the larger premium, is less. Therefore, the larger the group the higher the TLR. Also referred to as the Break-even Loss Ratio.

Temporary Disability Insurance

Insurance that covers off-the-job injury or sickness and is paid for by deductions from an individual’s paycheck; administered by state agency. Mandated in certain states. Also called unemployment compensation disability or state disability insurance.


Describes the final phase of an interrupted pension program. If the plan has enough assets to meet all its obligations, it is called a standard termination. In the case of a distress termination, the PBGC acts as trustee and uses its insurance funds as necessary to guarantee pension payments. Strict regulations govern all payout periods. Essentially all participants must vest 100%. However, the assets will have to be distributed according to the present formula. No money may return to the employer, except in the case of an actuarial error. It is also possible to discontinue contributions, but keep the trust in force, in order to preserve the tax-sheltered status of future payouts.

Third Party Administration (TPA)

The method of administration whereby a third party (neither the insurer or the policyholder) maintains all the records regarding the persons covered under his or her group insurance plan. The third party may be the advisor or a specialized administrative body. The third party prepares the premium statements for each premium due date and submits it with the premium cheque to the insurer. In certain instances, upon the approval of the insurer, the third party administrator may also be involved in the claims payment process.

Total Disability

An illness or injury that prevents an insured person from continuously performing every duty pertaining to his or her occupation or from engaging in any other type of work for remuneration.

Transportation Benefits

Some companies sponsor public transportation subsidies, van pools, employer-sponsored vans or buses that transport workers to the workplace. Aims to increase employee attendance and retention.

Trend Factor

Most carriers include a trend factor in the renewal rating of the dental benefit. This is in addition to the fee guide adjustment and reflects the annual increase in claims due to pure utilization. See Inflation Factor.

Trended Incurred Claims

Trended incurred claims are determined by multiplying the incurred loss ratio, for each experience period, by the applicable trend and/or inflation factor. The purpose of “trending” the incurred claims is to bring prior year’s claims to the equivalent monetary level of the current year’s claims.

Trended Incurred Loss Ratio

This is the ratio of the incurred claims to the adjusted premium, multiplied by the trend and/or inflation factor.

Turnaround Time

The time required to complete a particular project from the date of receipt to the completion date.


Underfunded Benefit Plan

An employee benefit plan in which the company’s past contributions are insufficient to cover current and future liabilities.


(Insurance) Can mean (1) the company that receives the premiums and accepts responsibility for fulfilling the policy contract, (2) the company employee who decides whether or not the company should assume a particular risk or (3) the agent who sells the policy.


(Insurance) The process of identifying and classifying the potential degree of risk represented by a proposed insured.

Union-Sponsored Plan

A program of health benefits developed by a union. The union may operate the program directly, or may contract for the benefits. Funds to finance the benefits are usually paid out of a welfare fund, which receives its income from (1) employer contributions, (2) employer and union member contributions or (3) union members alone.

Usual, Customary and Reasonable (UCR) Fees

Usual is the fee usually charged for a given service by a health care provider; customary is a fee in the range of usual fees charged by similar providers in area; reasonable is a fee that, according to the review committee, meets the lesser of the two criteria or is justified in the circumstances. Reimbursement is limited to the lowest of the three charges. Usual and customary charges are also being applied to workers’ compensation.


Vision Care Coverage or Plan

A separate plan covering medical treatment relating to eye conditions. Ophthalmologists, optometrists or opticians can render care.

Voluntary Benefits

Employer-sponsored benefits often available at group rates or discounts that create a value employees could not duplicate on their own. Examples include dental coverage, vision benefits, prescription drug coverage, life insurance, long-term care insurance, financial planning, legal services and college savings plans. Benefits are administered by the employer, but paid for by the employees.


Waiting period

See Eligibility Period and Probationary Period.


Relinquishing the right to a benefit, especially in regard to health benefits, flexible benefits or early retirement window plans. An agreement attached to a policy that exempts from coverage certain disabilities or injuries normally covered by the policy. Also known as exclusion endorsement. A supplementary life insurance policy benefit under which the insurer gives up its right to collect renewal premiums if the policy owner dies or becomes disabled. Also known as waiver of premium.

Waiver of Premium Provision

A provision whereby under certain conditions a person’s life insurance will be kept in full force by the insurer without further payment of premiums. It is used most often in the event of permanent and total disability.

Waiver of Premium Reserve

Once a waiver claim has been approved by the insurer they establish a waiver of premium reserve. The level of the reserve is determined by actuarial tables. The life insurance coverage continues, without any premium due, until death, recovery or the age limit specified in the contract.

Weekly Indemnity (WI)

An income replacement benefit, which is usually payable weekly, after an elimination period, to a disabled employee. It typically replaces a percentage of the employee’s earnings. Also see Short Term Disability.

Weighted Loss Ratio

This is the average loss ratio determined through the weighting process. See Weighting.


Weighting represents the portion of both the current and prior year’s experience which will be used to calculate an average loss ratio for the purpose of determining the experience rate. Generally the most current year’s experience is given the most weight since it is assumed to be the most accurate indication of future claiming patterns. However, the most recent year may not always be indicative of past or future claiming patterns so the previous one or two years are also given some consideration. Each carrier has their own weighting formula.

Wellness (Health Promotion) Programs

A broad range of employer- or union-sponsored facilities and activities designed to promote safety and good health among employees. The purpose is to increase worker morale and reduce the costs of accidents and ill health such as absenteeism, lower productivity and health care costs. May include physical fitness programs, smoking cessation, health risk appraisals, diet information and weight loss, stress management and high blood pressure screening.


Year’s Basic Exemption (YBE)

As defined by the CPP/QPP, the first 10% of an employee’s annual earnings up to the amount of the YMPE.

Yearly Maximum Pensionable Earnings (YMPE)

The YMPE is a factor used to define and limit the amount of an employee’s annual contributory earnings on which the employee’s and employer’s compulsory annual contributions to the CPP/QPP are based.